On our Knowledge of Markets for Knowledge ― A Survey

At the Lisbon Summit 2000 the EU set herself the goal of transforming the European Union by 2010 into “the most competitive and dynamic knowledge based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion”. I take this statement as a starting point for this paper for two reasons: On the one hand it acknowledges the crucial role of knowledge in an advanced economy. On the other hand, it raises the question what needs to be done in order to achieve this ambitious goal. In particular, since the EU is also committed to a market economy and the maintenance of competition the question arises how well markets function with respect to the creation and distribution of knowledge, and what measures may be required, either to support the market mechanism or to replace it by some other institutions. This article deals with the ?rst question and offers a survey of the problems encountered in markets dealing with knowledge. In the next section I discuss briefly the role of knowledge and information in economics. After that I point out a few difficulties with finding a precise and generally accepted definition of knowledge. Section 4 is the core of the article and discusses various types of market failures which might occur when the commodity produced and traded is knowledge. I conclude with a few suggestions for further research

Locational choice and price competition: Some empirical results for the Austrian retail gasoline market

Using data from the Austrian retail gasoline market we test the following two hypotheses derived from spatial economics: (i) Retail shops are more densely located in areas with a higher population density. (ii) Spatial competition equilibrium prices are decreasing in the density of seller locations. Both hypotheses are well supported by the data. Population density explains more than 95% of the cross-district variation in the density of gasoline stations. With respect to the relationship between prices and gas station density the coefficient has the predicted sign and is significant at the 5% level or better in all specifications. Estimation as simultaneous equations does not alter our conclusions, and suggests causality running from station density to price.

A Note on the Nonexistence of a Rationing Equilibrium in the Besanko-Thakor Model.

It is shown that in a credit market with two types of borrowers, distinguished only through their not commonly known probability of default, and with a perfectly elastic supply of deposits, a pair of contracts with random rationing of less risky loan applicants cannot be a Nash-equilibrium. Copyright 1993 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Acknowledgments

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